Upfronts 2009: UBS Predicts Ad Drop For Disney

Company expected to elaborate on Hulu partnership in next few weeks

UBS is predicting that Disney, will continue to see declines in advertising revenue in its fiscal second quarter, in line with the rest of its competitors. The company reports results on Tuesday, May 5.
UBS entertainment analyst Mike Morris is forecasting a 12% decline in advertising revenue at ABC, though notes that the rates of decline are slowing. He is penciling a 30% decline in ad sales at the local stations and a 12% decline at ESPN, which has been hit by a drop in ad spending in typically male categories such as autos and financial.
Network revenue is estimated to be $869 million for the quarter, down 12% but less drastic than its previous quarter. For the full year, UBS is forecasting network revenue at $3 billion. At the stations group, UBS isn't projecting a brighter picture with revenue expected to be down some 30% to $151 million. In cable, the analyst suggests a 9% decline in advertising sales and a 9% rise in subscription revenue.
While advertising revenue makes up 20% of the company's total revenue, Disney is less dependent on advertising than other competitors. Comparisons to last years quarter will be tough for many big media companies since programming development costs are larger this time around. Last years writers strike cut program costs for broadcasters which filled the schedules with repeats and reality shows.
Separately, Disney is expected to elaborate on its deal to become a partner in online video play Hulu, owned by News Corp. and NBC Universal. A well-placed source said the company would have some firm news in the next week or two.